Maine's hospitals got good news Monday out of Augusta.
It looks like the state will soon pay the nearly half-billion-dollar debt owed for back Medicaid payments.
After months of debate, a legislative committee finally got their hands on a pair of plans aimed at repaying Maine's hospitals $484-million in back Medicaid payments that have been piling up since 2009.
Governor LePage testified on behalf of his plan that would use a $184-million revenue bond to pay the hospitals, triggering a $300 million federal match. The governor wants to use future liquor revenues to pay off that bond. LePage says once that's done, he'll release $105 million in voter approved bonds. "I have a plan that will pay back the hospitals. Make the state's liquor business more competitive with New Hampshire and release millions to pay clean water, transportation projects, and starting to save money in our rainy day fund," LePage told the Veterans and Legal Affairs Committee.
LePage told the committee what the impact of this debt has done to hospitals and why it's imperative the state pays it off as soon as possible. "I have letters from nearly every hospital in the state of Maine with the same message that's being echoed. Hospitals have been forced to lay off employees and keep positions vacant. Hospitals have been forced to deplete savings and some are relying on lines of credit to stay open," LePage said. The governor says the hospitals would have their money 45 days after his plan is approved.
Minutes before the hearing, Democratic leaders unveiled a new plan that also uses liquor revenues to pay the hospital debt, but without borrowing. Democrats want to sell the contract to a private sector bidder and get a large, up-front payment, which would go to the hospitals. "This plan comes with a guarantee," said Maine Senate President Justin Alfond. "A guarantee that the hospitals will receive their money by September 30th of this year. And by getting this up front payment by September 30th of this year, the state will save $5 million in interest payments."
Democrats also want safeguards to keep the debt from building up all over again. They're proposing some cost containment mechanisms, including more transparency in the Medicaid billing process. They point to a recent article in Time Magazine outlining the price gouging that's been going on when it comes to hospital billing. The article referenced one instance where a patient was billed $77 for a box of gauze. "Just like we need to pay our bills, we need to know what's in our bills," said Maine Speaker of the House Mark Eves. "Going forward, we need to understand exactly what we're paying for and why."
Both sides are expecting the liquor contract to generate a cash windfall of more than $400 million for the state.
Back in 2004, the state signed a 10-year deal with the Maine Beverage Commission that netted the state $125-million up front, money they used to balance the budget at the time. Some critics of the deal say it may have cost the state as much as $100 million in lost revenue over the life of the deal.
According to the current agreement, all liquor sold in Maine must pass through Maine Beverage Company's Augusta warehouse. The five member Liquor and Lottery Commission decides how much to charge for liquor sold in Maine. That price is determined using a certain set of criteria. The state's liquor contract is scheduled to be re-negotiated next year, with the state getting a larger piece of the lucrative liquor pie this time around.
LePage wants the state to manage the Maine's liquor and set prices that would be more competitive with New Hampshire's liquor prices.
Democrats want to keep Maine's liquor in the hands of the private sector. "Let the experts, the private sector, run the state's liquor contract. And let's let them do it the right way," Alfond said.
There has been some confusion about whether Democrats want to link the hospital repayment to Medicaid expansion, a component of the national health care law. At their morning press conference, Democratic leaders said Medicaid expansion would provide more than 70,000 additional Mainers with healthcare. The federal government would pay 100% of the costs the first three years and 90% in the fourth year.
However, contrary to some reports, a Democratic spokesperson tells TV5 that Medicaid expansion is not part of the hospital repayment bill submitted by Senate Majority Leader Senator Seth Goodall Monday morning, but it is part of a comprehensive approach.
Governor LePage says he will not go along with any attempt by Democrats to link expansion of Medicaid with repaying the hospital debt. "We cannot currently pay for our welfare costs, our welfare bills. You see that with the hospital debt we racked up," said LePage spokesperson Adrienne Bennett. "But we need to be able to have that as a conversation as a separate issue with the federal government. That has nothing to do with this liquor contract."
But for the first time, LePage has shown a willingness to discuss Medicaid expansion, which is a change in direction from the stance he had previously taken on the issue. Bennett said Monday's LePage is not ruling out expansion.
The good news for hospitals is that for the first time it appears Democrats, Republicans and Governor LePage have found a small piece of common ground when it comes to repaying the debt their owed. "I want to be clear," Democrat Seth Goodall told the committee. "We may disagree on our approaches, but I agree with the governor. Democrats agree with the governor. We must pay our bills and pay back the hospitals. We can do that this session and we must."
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Maine's hospitals got good news Monday out of Augusta.
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